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A Brief History of the Bloomberg Terminal

Financial markets have always relied on timely information, and the drive for timeliness has always adapted to the latest technology. From clipper ships transiting the oceans to telegraph wires connecting cities to fiber-optic cables conducting trades in microseconds, traders have embraced any advantage to get the most up-to-date information. Indeed, the history of finance is really a story about how fast you can move information and who controls the interface.

It’s only natural that people also figured out

It’s only natural that people also figured out a way to profit by supplying that market intel. In 1841, for example, the Mercantile Exchange (predecessor to Dun & Bradstreet) began selling proprietary business information to its U.S. clients. The following decade, Paul Julius Reuter began selling news services and stock price information. To supplement the company’s telegraph dispatches, he sent pigeons between Aachen, Germany, and Brussels; each bird carried a cylinder containing slips of paper with that day’s stock prices. In 1867, an inventor named Edward Calahan introduced the first telegraphic ticker-tape machine, which spooled out stock price information in near real time; Thomas Edison improved upon the design with his patented version in 1871.

The Dow Jones Industrial Average debuted in 1896

The Dow Jones Industrial Average debuted in 1896 as an index of 12 key businesses listed on U.S. stock exchanges. It included gas, oil, coal, and electric companies, as well as enterprises dealing in leather, rubber, and tobacco. Messengers delivered quotes from the trading floor to brokerage offices, while stock tickers kept investors informed of prices. By the time New York City held its first official ticker-tape parade, in 1919, telegraphy in Western Europe and the United States had become the chief means for quick transmission of vital stock information.

In 1960, the first paperless financial service debuted

In 1960, the first paperless financial service debuted, when Quotron introduced its electronic screens for displaying market quotes. Over the next two decades, other companies rolled out similar innovations for distributing financial news and data.

So when Michael Bloomberg decided to enter this

So when Michael Bloomberg decided to enter this well-established industry in 1981, the big question was: How would his new company stand out? The Birth of the Bloomberg Terminal

Bloomberg had cofounded Innovative Market Systems (IMS) after

Bloomberg had cofounded Innovative Market Systems (IMS) after being fired from the investment bank Salomon Brothers. Landing on his feet with his US $10 million equity payout and joined by former Salomon colleagues Thomas Secunda, Duncan MacMillan, and Charles Zegar, Bloomberg pursued his belief that Wall Street would pay a premium for specialized financial data. He’d earned an electrical engineering degree from Johns Hopkins University and an MBA from Harvard, and he’d built computerized financial systems for Salomon. IMS focused on developing a computer terminal that not only provided up-to-date information but could also do instant quantitative analysis based on historical data.

Michael Bloomberg believed Wall Street would pay a

Michael Bloomberg believed Wall Street would pay a premium for access to specialized financial data. Karjean Levine/Getty Images

At the time, most financial data still circulated

At the time, most financial data still circulated through telephone calls, printed price sheets, and specialist publications, and analysis involved a fair amount of gut instinct guided by human expertise. Companies such as Reuters and Dow Jones provided subscription-based services for access to business news. But traders still had to assemble information from multiple sources and perform their own calculations and analysis.

IMS proposed an integrated system with a single

IMS proposed an integrated system with a single interface. Its Market Master terminal consisted of a monochrome CRT monitor, a custom keyboard, and a communications/controller unit that connected to the company’s private network. At launch, it provided only U.S. government bond prices and bond-calculation tools, but the dream was much bigger: a dedicated terminal that would sit on a trader’s desk and run different market scenarios, produce yield curves, and support investment calculations.

IMS initially had just one client, Merrill Lynch

IMS initially had just one client, Merrill Lynch, which invested $30 million (about $110 million today) in exchange for a 30 percent stake in the company and exclusive rights to the terminals for five years; Merrill waived that right in 1984. The first 22 Market Master terminals were delivered to Merrill in 1982, in the middle of a global recession. The timing was fortuitous. Worldwide, stock markets were transitioning to electronic trading, and the U.S. Federal Reserve was allowing more freely floating interest rates. Bond prices were more volatile, and investors were eager to figure out how to value them accurately. Bloomberg’s specialized financial terminals provided the data and the analytical tools to process and comprehend those sweeping changes.

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A Brief History of the Bloomberg Terminal

Financial markets have always relied on timely information, and the drive for timeliness has always adapted to the latest technology.

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Source: Hacker News
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